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Coronavirus
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9824hr
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KPK
109,704

As the sprawling city of Karachi is doused in unexplained power outages, the federal government is all ready to put metal to the pedal on the Electric Vehicle (EV) policy with the goal to have 30 percent of the vehicles running on electricity by 2030. Sounds almost comical. Perhaps Pakistan has come a long way in electricity generation and has excess capacity (for which it is paying a hefty sum of capacity payments) to divert toward EVs but there seems to be an unhealthy self-congratulatory fixation on electricity generation leaving little room to think about transmission and distribution which remain the Achilles heel of the power sector.

The merits of electric vehicles are perennially seductive. It is a green technology which will substantially reduce carbon emissions. To note, EVs have zero emissions from the vehicle tailpipe but upstream emissions (or otherwise known as well-to-wheel emissions) of greenhouse gases from electricity production are still persistent. To really have an environmental impact, energy generation will have to go green. Having said that, reduced carbon footprint would allow the country to defend itself from critical climate related risks.

Moreover, EVs will help shrink the enormous import bill from fossil fuels that would minimize the pressures on the trade balance and exchange rate. Though they are capital-heavy, they have very low running costs. According to a study conducted by LUMS Energy Institute & U.S.- Pakistan Center for Advanced Studies in Energy (USPCAS-E) in 2019, fossil fuel vehicles run one kilometre for Rs10 (calculated by the authors on fuel costs at the time), while EVs cover a kilometre for only Rs3. That is a substantial saving for EV users.

The study suggested that the Pakistani market could easily bring 0.5 million EVs by 2025 given its existing electricity capacity. According to the authors, each EV will require 28kWh of energy in a day which means, daily energy consumption for 0.5 million vehicles would come to 16,100 Mwh (accounting for transmission and other losses). Assuming every electric vehicle travels for 300 days in a year, the total annual energy required by 0.5 million EVs would be 4.8TWh—about 11 percent of the excess capacity. To compare, this energy is approximately equal to the load of adding 1.36 million new residential air conditioners.

The study further argues that there will be excess capacity in Pakistan over the next few years which if left unutilized will keep ballooning the capacity payments. Instead, utilizing 4.8TWh of energy would cut down the capacity payments by Rs21 billion and generate a revenue of Rs31.5 billion to the economy. This is all too good to be true.

The truth is, there is a tunnel vision here in policymaking. When EVs are mentioned in Pakistan, there is a routine reference to the need for “reliable power supply” but what does that mean when a country is opening itself to an entire new industry hoping to invest fresh new investments while unable to tackle the volatility in the power sector despite many, many interventions over the years. The burden here will be huge.

Is the grid infrastructure reliable enough to transmit and distribute electricity to the charging stations that will be developed across the country at various locations? Investment in the EV market would only make commercial sense if the underlying infrastructure is already working. Even if the charging infrastructure can be fast developed—though as the aforementioned study emphasizes, this a chicken and egg problem whereby investments would only flow into charging infrastructure if the EVs are already on the road—the complex moving parts within the power supply chain will have to be well-oiled enough to provide uninterrupted power on feeders for these charging stations to work.

There is precious little conversation on that. Incentives right now are tackling supply side issues but also need to look at demand side. EVs are going to be expensive, on top of which, if grid electricity is unreliable, consumers will have to install solar panel technology to run their EVs which the government needs to incentivize. But not everyone can install a solar panel. Introducing EV is a novel idea with many cascading positive effects but there will have to be a seamless transition from combustion engine vehicles to electric vehicles for consumers to feel it is actually worth it.